Archive for spot price gold

December gold futures closed the week higher once again ending the gold trading session and the week at $1772.70 per ounce and pushing towards the $1800 per ounce region again. Friday’s trading session was relatively muted following Thursday’s surge higher with gold propelled upwards following the statement from Fed Chairman Ben Bernanke that a further stimulus of $40 billion per month would now be pumped into the US economy as QE3 was duly rolled out, much as expected. With further economic stimulus comes a weak dollar and as Hawkeye has been forecasting for some time, a bullish trend for gold, which along with other commodities such as silver and oil, has received a boost to current short term trends as a result.

Friday’s price action was in a narrow range, as the gold market paused for breath, with speculators and investors squaring their positions ahead of the weekend. Nevertheless, the daily trading volume on Friday was still high and with plenty of buying still in evidence, couples with solid buying on the three day chart, this trend has a long way to run yet.

From a technical perspective the next area to breach is the highs of $1802 per ounce, last seen back in February, and if we see this level broken, then gold prices are likely to continue to rise further. Indeed with the three day trend now bullish, and the Hawkeye Heatmap also remaining green, this is also confirming the bullish picture for gold in the short to medium term. The US dollar index daily chart is also adding further momentum, and with sustained dollar weakness now likely as the QE3 program gathers pace, expect to see gold futures and the price of gold continue to rise and develop a longer term trend, possibly to break above $2000 per ounce in 2013.

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Gold futures surged higher on Friday with the December Comex contract ending the session and week at $1687.60, it’s highest level for over five months. Friday’s surge in the price of gold was largely triggered by weakness in the US dollar, which sold off during the trading session following the statement by FED chairman Ben Bernanke in which he hinted that the Federal Reserve were ‘ready to pull the trigger’ for a further round of quantitative easing. With this much vaunted stimulus for the US economy now virtually guaranteed, this will no doubt provide the catalyst for further gains in the gold price, with a consequent weakening in the US dollar as a result.

From a technical perspective the recent breakout on the daily gold chart gave a clear signal of the bullish sentiment, following the sustained period of sideways congestion which saw the precious metal trade in a narrow range throughout the summer. The breakout finally arrived on the 21st August, finally breaking and holding above the $1640 per ounce level, and with this strong platform now in place, gold looks set to build a sustained bullish trend over the next few months.

Hawkeye delivered a conservative Roadkill signal on the 24th August, as bullish volume on both the one day and three day charts, coupled with a bright green Heatmap and bullish trend on the three day chart, all combined to deliver an entry to the market. The only minor point to note is that selling volume entered the market on Thursday, followed by no demand volume on Friday, but this was almost certainly due to gold traders squaring their positions ahead of the three day weekend coupled with month end.

With the initial breakout now complete we can expect to see further bullish sentiment for the metal over the next few weeks, with an initial test of the resistance now in place at the $1720 per ounce level, which extends to $1760 per ounce. A breach of this level, should then see gold price move on to test the high of mid February at the psychological $1800 per ounce in due course.

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Following yesterday’s small hammer candle on the daily gold chart the spot gold price has recovered some of its poise today climbing back above the 40 day moving average to trade at time of writing at $1354.19 per ounce. As such we are now trading back above the 40 day moving average, a key indictor and for any longer term recovery and a continuation of the bullish trend we need to see the precious metal move back above both the 9 and 14 day moving averages which are currently at $1374.46 and $1372.03 respectively. A move above here will also coincide with a breach of the short term resistance in this price area and thereafter provide a strong platform for a move back towards $1400 per ounce and beyond. As I stated in a previous post the recent correction in the spot gold price is not a longer term reversal but merely reflects the market’s nervousness following the problems in Europe coupled with a potential slowdown in China.

The price of spot gold continued to move lower once again yesterday, following the market’s nervous reaction to a potential interest rate rise in China, sparking fears of falls in demand across the commodity sector as inflation continues to take a firm hold in the Chinese economy. Over the weekend however, the People’s Bank of China kept rates on hold for the time being, calming the markets in the short term. Despite this decision, spot gold continued to press lower, ending the day with a relatively narrow spread down candle on the daily chart, which broke and held below the 14 day moving average, and adding a further layer of bearish sentiment to the metal.

From a technical perspective the move lower can as no great surprise, and indeed this was our conclusion on the 10th November last week following the weakness seen on the daily gold chart with the shooting star candle. Whilst the move lower was more significant than we had expected, this has not changed the longer term technical picture which remains firmly bullish, and provided the 40 day moving average remains unbroken in the 1,246.81 per ounce region, then we can expect to see spot gold prices recover in due course and continue their longer term upwards momentum. In the short term, we now need to see a break and hold above the 14 day moving average at $1,374.10 per ounce, and thereafter a move above the 9 day moving average at $1,386.46 which would then open the way for a test of the $1400 per region and beyond in due course.

As I have said many time before ( and I make no apologies for it ) I am a confirmed gold bug, and like silver, gold continues to remain an excellent longer term investment, and whilst many analysts are calling the top of the market, my own view is that we are well away from any major correction for the precious metal, and I expect to see spot gold making record highs in the next few weeks, and on towards my target for the Q2 next year of $1650 per ounce and beyond.

An interesting and volatile for spot gold yesterday which saw the precious metal reach a high of $1424 per ounce and low of $1383 before closing the gold trading session as a narrow spread down candle but with wicks to both top and bottom, and eventually closing at $1396.35. The candle thus formed is giving us a strong signal that we may see a temporary pullback from the recent surge higher and indeed in today’s gold trading session so far, this has certainly been the case once again with the spot gold price oscillating between $1410 to the upside and $1383 to the downside. Should today’s doji candle be confirmed at the close tonight then this will add further weight to the analysis suggesting a re-tracement and a possible pullback to test the 9 day moving average which currently sits at $1377.21 on the daily spot gold chart.

Over the last two days this has remained untested and any breach here may bring the 14 day into play along with a potential platform of support at $1378.04. With the longer term trend still remaining firmly bullish yesterday’s candle is simply symptomatic of a market that was beginning to overheat and, as such, is cooling off before resuming its upwards path.